Grocery Outlet (GO) Shares Skyrocket, What You Need To Know

What Happened?

Shares of discount grocery store chain Grocery Outlet (NASDAQ:GO) jumped 38.9% in the afternoon session after the company reported second-quarter earnings that surpassed analyst expectations and raised its full-year profit forecast. The discount grocer posted an adjusted profit of $0.23 per share, which outpaced projections. In response to the strong quarter, management lifted its full-year adjusted earnings guidance to a range of $0.75 to $0.80 per share, above its prior outlook and Wall Street's estimates. The company attributed the better-than-expected performance to improved operational efficiency and increased comparable store sales. Following the results, Morgan Stanley upgraded the stock to Equalweight from Underweight and increased its price target, noting that the company's fundamentals appeared to be turning around.

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What Is The Market Telling Us

Grocery Outlet’s shares are very volatile and have had 25 moves greater than 5% over the last year. But moves this big are rare even for Grocery Outlet and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 5 months ago when the stock dropped 29.3% on the news that the company reported weak fourth-quarter results: its EPS, EBITDA, and full-year guidance for both metrics missed. Revenue narrowly topped Wall Street estimates. However, gross margin contracted due to higher inventory shrinkage from system conversion issues. Looking ahead, full-year guidance points to low-double-digit EBITDA growth, but margins remain under pressure, and restructuring costs could weigh on near-term profitability. The company recently appointed Jason Potter as its new CEO, bringing over 30 years of industry experience. His leadership will be closely watched as Grocery Outlet works to strengthen its operations and drive long-term growth. Overall, this quarter had some bright spots in revenue growth, but profitability challenges and a soft outlook made it a tough period for investors​.

Grocery Outlet is up 11.7% since the beginning of the year, but at $18.21 per share, it is still trading 14.3% below its 52-week high of $21.25 from November 2024. Investors who bought $1,000 worth of Grocery Outlet’s shares 5 years ago would now be looking at an investment worth $408.80.

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